This is the accessible text file for GAO report number GAO-13-833
entitled 'Defense Acquisitions: Navy Strategy for Unmanned Carrier-
Based Aircraft System Defers Key Oversight Mechanisms' which was
released on September 26, 2013.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as
part of a longer term project to improve GAO products' accessibility.
Every attempt has been made to maintain the structural and data
integrity of the original printed product. Accessibility features,
such as text descriptions of tables, consecutively numbered footnotes
placed at the end of the file, and the text of agency comment letters,
are provided but may not exactly duplicate the presentation or format
of the printed version. The portable document format (PDF) file is an
exact electronic replica of the printed version. We welcome your
feedback. Please E-mail your comments regarding the contents or
accessibility features of this document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
United States Government Accountability Office:
GAO:
Report to Congressional Committees:
September 2013:
Defense Acquisitions:
Navy Strategy for Unmanned Carrier-Based Aircraft System Defers Key
Oversight Mechanisms:
GAO-13-833:
GAO Highlights:
Highlights of GAO-13-833, a report to congressional committees.
Why GAO Did This Study:
The Navy estimates that it will need $3.7 billion from fiscal year
2014 through fiscal year 2020 to develop and field an initial UCLASS
system. The National Defense Authorization Act for Fiscal Year 2012
mandated that GAO evaluate the UCLASS system acquisition strategy.
This report (1) assesses the UCLASS acquisition strategy, (2)
identifies key areas of risk facing the system, and (3) notes areas
where the Navy’s strategy contains good practices. To do this work,
GAO reviewed the Navy’s acquisition strategy and compared it to DOD’s
acquisition policy, among other criteria; and reviewed Navy
acquisition documents and spoke with Navy and Office of the Secretary
of Defense officials.
What GAO Found:
In fiscal year 2014, the Navy plans to commit to investing an
estimated $3.7 billion to develop, build, and field from 6 to 24
aircraft as an initial increment of Unmanned Carrier-Launched Airborne
Surveillance and Strike (UCLASS) capability. However, it is not
planning to hold a Milestone B review—a key decision that formally
initiates a system development program and triggers key oversight
mechanisms—until after the initial UCLASS capability has been
developed and fielded in fiscal year 2020. The Navy views UCLASS as a
technology development program, although it encompasses activities
commensurate with system development, including system integration and
demonstration. Because the initial UCLASS system is to be developed,
produced, and fielded before a Milestone B decision, Congress’s
ability to oversee the program and hold it accountable for meeting
cost, schedule, and performance goals will likely be limited.
Specifically, the program will operate outside the basic oversight
framework provided by mechanisms like a formal cost and schedule
baseline, statutory unit cost tracking, and regular reports to
Congress on cost, schedule, and performance progress. The Navy
believes its approach effectively utilizes the flexibility in the
Department of Defense’s (DOD) acquisition policy to gain knowledge
needed to ensure a successful UCLASS system development program
starting in fiscal year 2020. Yet the Navy expects to review
preliminary designs, conduct a full and open competition, and award a
contract for UCLASS development in fiscal year 2014, a point at which
DOD policy and best practices indicate that a program would be
expected to hold a Milestone B review to initiate a system development
program. Apart from deferring Milestone B, the Navy’s plan would be
consistent with the knowledge-based acquisition process reflected in
DOD policy.
UCLASS faces several programmatic risks going forward. First, the
UCLASS cost estimate of $3.7 billion exceeds the level of funding that
the Navy expects to budget for the system through fiscal year 2020.
Second, the Navy has scheduled 8 months between the time it issues its
request for air vehicle design proposals and the time it awards the
air vehicle contract, a process that DOD officials note typically
takes 12 months to complete. Third, the UCLASS system is heavily
reliant on the successful development and delivery of other systems
and software, which creates additional schedule risk. Fourth, the Navy
will be challenged to effectively manage and act as the lead
integrator for three separate but interrelated segments—air vehicle,
carrier, and control system—and 22 other government systems, such as
the aircraft landing system, the timing and alignment of which are
crucial to achieving the desired UCLASS capability. While the Navy
recognizes many of these risks and has mitigation plans in place, they
could lead to cost increases and schedule delays if not effectively
addressed.
The Navy’s UCLASS acquisition strategy includes some good acquisition
practices that reflect aspects of a knowledge-based approach. For
example, the Navy is leveraging significant knowledge gained from
prior technology development efforts, incorporating an open systems
design approach, working to match the system’s requirements with
available resources, and reviewing preliminary designs for the air
vehicle before conducting a competition to select a single contractor
to develop and deliver the air vehicle segment.
What GAO Recommends:
Congress should consider directing the Navy to hold a Milestone B
review for the UCLASS system after the system level preliminary design
review is complete. If the Navy does not comply, Congress should
consider limiting the amount of funding available for the UCLASS
system until an acquisition program baseline is provided. GAO included
these matters for consideration because the Navy does not plan to make
changes as a result of GAO’s recommendation to hold a Milestone B
review following the system level preliminary design review—which is
currently scheduled in fiscal year 2015. The Navy did not concur with
the recommendation, and believes that its approved strategy is
compliant with acquisition regulations and laws. GAO continues to
believe that its recommendation is valid as discussed in this report.
View [hyperlink, http://www.gao.gov/products/GAO-13-833]. For more
information, contact Michael J. Sullivan at (202) 512-4841 or
sullivanm@gao.gov.
[End of section]
Contents:
Letter:
Background:
The Navy's UCLASS Acquisition Strategy Defers Key Oversight Mechanisms:
UCLASS Faces Cost, Schedule, and Program Management Risks:
UCLASS Acquisition Strategy Contains Aspects of a Knowledge-Based
Approach:
Conclusions:
Matters for Congressional Consideration:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: GAO Contact and Staff Acknowledgments:
Figures:
Figure 1: DOD's Acquisition Process Aligns with a Knowledge-Based
Approach:
Figure 2: Navy Plans to Develop and Field Initial UCLASS System before
Milestone B:
Figure 3: Navy Plan Defers Establishment of UCLASS Acquisition Program
Baseline:
Abbreviations:
DOD: Department of Defense:
JPALS: Joint Precision Approach and Landing System:
J-UCAS: Joint Unmanned Combat Air System:
OSD: Office of the Secretary of Defense:
UCAS-D: Unmanned Combat Aircraft System Demonstration:
UCLASS: Unmanned Carrier-Launched Airborne Surveillance and Strike:
[End of section]
GAO:
United States Government Accountability Office:
441 G St. N.W.
Washington, DC 20548:
September 26, 2013:
Congressional Committees:
The Navy expects to invest $3.7 billion from fiscal year 2014 through
fiscal year 2020 to develop, test, and field an initial Unmanned
Carrier-Launched Airborne Surveillance and Strike (UCLASS) system. The
system is expected to provide intelligence, surveillance,
reconnaissance, targeting, and strike capabilities to the Navy's
aircraft carrier fleet. The UCLASS system is made up of three primary
segments: (1) unmanned air vehicle, (2) aircraft carrier
modifications, and (3) control system.[Footnote 1]
The National Defense Authorization Act for Fiscal Year 2012 mandated
that GAO evaluate the UCLASS system's acquisition strategy.[Footnote
2] This report (1) assesses the Navy's UCLASS acquisition strategy,
(2) identifies key areas of risk facing the UCLASS system, and (3)
notes areas where the Navy's strategy contains good practices.
To assess the Navy's UCLASS acquisition strategy, identify risks
facing the system, and identify good practices, we collected and
reviewed the Navy's UCLASS acquisition strategy, analysis of
alternatives, capabilities development document, and other relevant
Navy management documents. We compared the Navy's strategy with best
practice standards for using knowledge to support key program
investment decisions[Footnote 3] and Department of Defense (DOD)
acquisition policy.[Footnote 4] We discussed the UCLASS acquisition
strategy with officials from the UCLASS system program office, the
Naval Air Systems Command, the Chief of Naval Operations, and
organizations within the Office of the Secretary of Defense (OSD)
including the Director of OSD Cost Assessment and Program Evaluation,
the Deputy Assistant Secretary of Defense for Systems Engineering, and
the Under Secretary of Defense for Acquisition, Technology, and
Logistics. See appendix I for additional information on our
objectives, scope, and methodology.
We conducted this performance audit from July 2013 to September 2013
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Background:
The Navy's UCLASS system will be the first unmanned aircraft system
deployed on an aircraft carrier. Efforts to develop an unmanned combat
air system for the Navy can be traced back to 2003 when DOD
established a joint Navy and Air Force program called the Joint
Unmanned Combat Air System (J-UCAS). This joint effort drew on
knowledge that the Air Force had gained through early development of
the Unmanned Combat Air Vehicle, an effort that began in the late
1990s. The J-UCAS program was canceled in late 2005. The following
year, the Navy initiated the Unmanned Combat Air System Demonstration
(UCAS-D) program--the immediate predecessor to UCLASS--with the intent
to design, develop, integrate, test, and demonstrate the technical
feasibility of operating unmanned air combat systems from an aircraft
carrier. In 2013, the Navy successfully launched and landed a UCAS-D
on an aircraft carrier. In total the Navy invested more than $1.4
billion in the UCAS-D program. In 2011, as UCAS-D efforts were
ongoing, the Navy received approval from DOD to begin planning for the
UCLASS acquisition program.
In our past work examining weapon acquisition and best practices for
product development, we found that leading commercial firms and
successful DOD programs pursue an acquisition approach that is
anchored in knowledge, whereby high levels of knowledge are
demonstrated at critical junctures. Specifically, there are three
critical junctures--knowledge points--in an acquisition program at
which decision makers must have adequate knowledge to make large
investment decisions.[Footnote 5] If the knowledge attained at each
juncture does not confirm the business case on which the acquisition
was originally justified, the program does not go forward. At the
first knowledge point, a match must be made between the customers'
needs and the available resources--technical and engineering
knowledge, time, and funding--before a system development program is
started. At the second knowledge point, about midway through
development, the developer must demonstrate that the system's design
is stable and that it can meet performance requirements. At the third
knowledge point, the developer must show that the system can be
manufactured within cost, schedule, and quality targets and that it is
reliable before beginning production. The first knowledge point is the
most critical point of the three. At that point programs should
present their business case for review and approval, which establishes
an acquisition program baseline. This baseline describes the cost,
quantity, schedule, and performance goals of a program and provides a
framework for effective oversight and accountability. This first
knowledge point typically coincides with a substantial financial
commitment.[Footnote 6]
DOD's acquisition policy and guidance encourage the use of a knowledge-
based acquisition approach, in which major decision reviews are
aligned with the start of key acquisition phases, including technology
development, system development--referred to as engineering and
manufacturing development--and production. Figure 1 aligns the
knowledge points with key decision points in DOD's acquisition process.
Figure 1: DOD's Acquisition Process Aligns with a Knowledge-Based
Approach:
[Refer to PDF for image: process illustration]
Technology Development:
DOD acquisition milestone: Development start (Milestone B);
GAO knowledge point: Knowledge point 1: Technologies and
resources match requirements.
System development:
Integration:
GAO knowledge point: Knowledge point 2: Design performs
as expected.
Demonstration:
GAO knowledge point: Knowledge point 3: Production can meet
cost, schedule, and quality targets.
Production:
DOD acquisition milestone: Production start (Milestone C).
Source: GAO.
[End of figure]
According to DOD acquisition policy, the purpose of the technology
development phase is to reduce technology risk, determine and mature
the appropriate set of technologies to be integrated into a full
system, and to demonstrate critical technology elements on prototypes.
[Footnote 7] A system level preliminary design review is to be held
during the technology development phase to inform requirements trades;
improve cost estimation; and identify remaining design, integration,
and manufacturing risks. The results of the preliminary design review
are to be reported to decision makers at Milestone B--the decision
review in DOD's process that corresponds with knowledge point 1 and
initiates system development. The purpose of system development is to
develop a system or an increment of capability, complete full system
integration, develop an affordable and executable manufacturing
process, and demonstrate system integration, interoperability, safety,
and utility, among other things. System development provides a
critical opportunity for objective oversight before beginning
production.
At Milestone B, major defense acquisition programs are required by DOD
policy to have approved requirements, an independent cost estimate,
and an acquisition program baseline; begin tracking unit cost changes
and report unit cost growth against Nunn-McCurdy statutory
thresholds;[Footnote 8] and periodically report to Congress on the
cost, schedule, and performance status of the program in Selected
Acquisition Reports.[Footnote 9] At that time, major defense
acquisition programs are also required by statute to present a
business case analysis and certify on the basis of that analysis that
the program is affordable, has reasonable lifecycle cost and schedule
estimates, and that technologies have been demonstrated in a relevant
environment, among other things.[Footnote 10] Taken together, these
requirements form the basic oversight framework to ensure that
Congress and DOD decision makers are adequately informed about the
program's cost, schedule, and performance progress. In addition, the
information is valuable for identifying areas of program risk and its
causes, and helps to ensure that decision makers consider the full
financial commitment before initiating a new development program. Once
initiated at Milestone B, major defense acquisition programs are
required to measure program performance against the program's baseline
estimate. Changes to the baseline are only authorized under certain
conditions, including a program restructure that is approved by the
milestone decision authority, or a breach of the critical Nunn-McCurdy
statutory threshold where DOD certifies continuation of the program to
Congress.
The Navy's UCLASS Acquisition Strategy Defers Key Oversight Mechanisms:
In fiscal year 2014, the Navy plans to commit to investing an
estimated $3.7 billion to develop, produce, and field from 6 to 24
aircraft and modify 1 to 4 aircraft carriers as an initial increment
of UCLASS capability--referred to as an early operational capability.
The Navy plans to manage UCLASS as if it were a technology development
program, although its strategy encompasses activities commensurate
with a program in system development and early production.
Accordingly, it is not planning to hold a Milestone B review to
formally initiate a system development program--which would trigger
key oversight mechanisms--until after the initial capability is
fielded in fiscal year 2020. This strategy means the program will not
be subject to these oversight mechanisms including an acquisition
program baseline; Nunn-McCurdy unit cost growth thresholds; and
periodic reporting of the program's cost, schedule, and performance
progress. This strategy will likely limit Congress's ability to
oversee this 6-year multibillion dollar program. Navy officials
believe that their approach effectively utilizes the flexibility in
DOD's acquisition policy to ensure that UCLASS requirements and
concept of operations are well understood and achievable before
formally beginning a system development program. Yet they emphasize
that by fiscal year 2020 they may have accumulated enough knowledge to
allow them to bypass a formal development program and proceed directly
to production at Milestone C. Figure 2 illustrates the Navy's strategy.
Figure 2: Navy Plans to Develop and Field Initial UCLASS System before
Milestone B:
[Refer to PDF for image: illustration]
Fiscal year 2011: Material development decision.
Fiscal year 2014: Milestone A decision.
Fiscal year 2015: System preliminary design review.
Fiscal year 2016: System critical design review.
Fiscal year 2020: Early operational capability; Milestone
B or C decision.
Air vehicle segment:
Set requirements and preliminary design: FY 2011-FY 2014;
Segment preliminary design review (PDR): Mid-FY 2014;
Preliminary design contract awards: Mid-FY 2014;
Integration and demonstration: FY 2015-FY 2019; first flight: FY 2017;
Sea trials and fielding: FY 2019-2020.
Aircraft carrier segment:
Set requirements and preliminary design: FY 2011-FY 2014;
Segment preliminary design review (PDR): FY 2015;
Integration and demonstration: FY 2015-FY 2019; first flight: FY 2017;
Sea trials and fielding: FY 2019-2020.
Control segment:
Set requirements and preliminary design: FY 2011-FY 2014;
Segment preliminary design review (PDR): FY 2015;
Integration and demonstration: FY 2015-FY 2018.
Source: GAO analysis of DOD data.
[End of figure]
As indicated above, the Navy plans to award four firm fixed-price
contracts in fiscal year 2013 to competing contractors to develop
preliminary designs for the UCLASS air vehicle.[Footnote 11] The
following year, the Navy plans to review those preliminary designs,
conduct a full and open competition, and award a contract to develop
and deliver the UCLASS air vehicles, effectively ending competition
within the air vehicle segment. A review of the full system level
preliminary design--including the air vehicle, carrier, and control
segments--is scheduled for fiscal year 2015. DOD policy and best
practices indicate that around this review point a program would
typically be expected to hold a Milestone B review and transition from
technology development to system development. Figure 3 illustrates the
later point in the process in which the Navy plans to establish the
UCLASS acquisition program baseline and formally initiate a
development program.
Figure 3: Navy Plan Defers Establishment of UCLASS Acquisition Program
Baseline:
[Refer to PDF for image: illustration]
DOD acquisition process:
Technology Development:
Milestone decision review to establish program baseline.
Unmanned Carrier-Launched Airborne Surveillance and Strike (UCLASS)
acquisition strategy:
Technology Development:
System Development:
* Integration;
* Demonstration;
Milestone decision review to establish program baseline.
Preliminary design review: during Technology Development.
Critical design review: during System Development: after Integration
and before Demonstration.
Source: GAO analysis of DOD data.
[End of figure]
Although the Navy does not plan to hold a Milestone B review until
2020, if at all, it is effectively committing to system development
and early production in fiscal year 2015. According to the Navy's
strategy, system development and early production activities,
including system integration and air vehicle fabrication, will begin
in fiscal year 2015 around the time of the system-level preliminary
design review. The Navy also expects to increase annual funding for
the UCLASS system from $146.7 million to $522.5 million between fiscal
years 2014 and 2015. Testing to demonstrate the system's capabilities
is scheduled to take place from fiscal year 2017--scheduled first
flight--through fiscal year 2020, when an early operational capability
is expected to be achieved. If the program proceeds according to the
Navy's plan, by 2020, it will have completed many of the activities
typically authorized by a Milestone B decision. Moreover, since enough
quantities of UCLASS are expected to be delivered for operational use
on one or more aircraft carriers, the strategy could also be seen as
having begun early production before a Milestone C decision is held.
In a March 2007 report we identified oversight challenges presented by
an acquisition strategy that calls for proceeding into system
development, demonstration, manufacturing, and fielding without the
benefit of a Milestone B decision.[Footnote 12] A framework of laws
make major defense acquisition programs accountable for their planned
outcomes and cost, give decision makers a means to conduct oversight,
and ensure some level of independent program review. The application
of these acquisition laws is typically triggered by a program's entry
into system development. While the activities the UCLASS program plans
to undertake exemplify that the program is entering into system
development, these laws will not be triggered because the program is
not holding a Milestone B review and formally initiating a development
program. Therefore, the UCLASS program will not be accountable for
establishing a program baseline or for reporting any cost growth to
that baseline to DOD and Congress.
UCLASS Faces Cost, Schedule, and Program Management Risks:
The UCLASS system faces several risks related to cost, schedule, and
program management that, if not addressed, could lead to additional
cost and significant schedule delays for the system. The Navy
recognizes that many of these risks exist and has mitigation plans in
place to address them.
* UCLASS cost estimates are uncertain and could exceed available
funding: Preliminary cost estimates completed by the Navy indicate
that the development and fielding of the initial UCLASS system through
fiscal year 2020 could cost between $3.7 and $5.9 billion, all of
which is expected to be development funding. However, the Navy has
only projected funding of $3.2 billion for the system through fiscal
year 2020. The variability in the cost estimates is due largely to
cost estimating ground rules and assumptions. For example, Navy
officials stated that the $3.7 billion cost estimate reflects an
assumed savings of 15 to 20 percent that they believe is achievable
since competing contractors' preliminary designs will be relatively
mature. Navy and DOD officials we spoke with emphasized that no true
sense of cost will be known until after the air vehicle segment
preliminary design reviews have been completed and a single contractor
has been selected. If the preliminary designs are less mature than
assumed, costs could increase significantly, further exceeding
budgeted resources.
* Source selection schedule is compressed: After the four competing
contractors have completed their preliminary air vehicle designs, the
Navy plans to conduct a full and open competition before awarding the
air vehicle segment contract. The Navy's strategy allows for about 8
months between the time that it issues its request for air vehicle
proposals and the time it awards the contract. According to OSD
officials, this type of contract award process typically takes
approximately 12 months.
* UCLASS is dependent on development and delivery of other systems:
The Navy identifies the delivery of the Common Control System software
as a risk and notes that if it is delayed, alternative control system
software would be needed to achieve the established deployment
timeline.[Footnote 13] Using alternative software would increase
integration costs and extend the testing timeline, resulting in
duplicated development, integration, and testing once the common
control system software is delivered. The Navy expects this risk to be
mitigated over time as individual segments of the control system
software are built, delivered, integrated, and tested.
UCLASS is also critically dependent on the development and fielding of
the Joint Precision Approach and Landing System (JPALS), which is a
global positioning system-based aircraft landing system that guides
the aircraft to make a safe landing on the aircraft carrier deck.
However, in a March 2013 report, we found that the JPALS program has
experienced significant schedule delays.[Footnote 14] Additional JPALS
delays would likely affect the Navy's UCLASS schedule, in which case
the Navy may need to identify an alternative landing system for
UCLASS, thus increasing the cost and delaying delivery of the
capability. The Navy recognizes this risk. The program office holds
weekly integrated master schedule reviews with the JPALS program and
plans to mitigate risk through JPALS testing, initial deployments, and
continued communication with the JPALS program and other Navy offices.
* UCLASS system integration will be challenging: The Navy plans to act
as the lead systems integrator for all three segments through the
development and fielding of the initial UCLASS system. The Navy will
have three separate but interrelated segments to manage, the timing
and alignment of which are crucial to success of the overall system.
The system is reliant on 22 existing government systems, such as
JPALS. The Navy recognizes that there is risk associated with its role
as the lead systems integrator, as it does not routinely act in this
capacity. Therefore, the Navy plans to manage this risk through
interaction with industry and regular system level reviews. According
to program officials, this integration effort will require the number
of full time equivalent staff in the program office to double from its
current level of 150 staff to around 300 staff.
UCLASS Acquisition Strategy Contains Aspects of a Knowledge-Based
Approach:
While the Navy has not yet established a business case or acquisition
program baseline, the UCLASS strategy reflects aspects of a knowledge-
based approach. Some of these aspects are discussed in more detail
below:
* Leveraging significant knowledge gained from prior technology
development efforts: The Navy is planning to maximize the use of
technologies for carrier-based unmanned aircraft systems operations
that have been developed under other efforts like the UCAS-D program,
which recently demonstrated the feasibility of launching and landing
an unmanned aircraft on an aircraft carrier. Navy officials note that
they plan to leverage navigation and control technologies, among other
things, from the demonstration program. By effectively leveraging
these types of previous investments, along with other existing systems
and technologies, the Navy could reduce cost and schedule for the
UCLASS system and promote affordability.
* Incorporating an open systems design approach: [Footnote 15] We
reported in July 2013 that the Navy is planning to use an open systems
approach for the UCLASS system.[Footnote 16] The Navy has identified
key system interfaces and, according to program officials, plans to
require contractors to comply with particular open system standards,
which it believes will reduce acquisition costs and simplify
integration. The Navy also plans to incorporate an open systems
architecture developed by OSD for the UCLASS system control segment.
This architecture implements a common framework, user interfaces,
software applications, and services, and is designed to be common
across unmanned aircraft systems. DOD estimates that the open
architecture will reduce costs and allow for rapid integration of
payloads.
* Matching requirements to available resources: In 2012, the Joint
Requirements Oversight Council issued a memorandum that required the
Navy to reduce its UCLASS requirements because at that time they were
deemed unaffordable. The Joint Requirements Oversight Council
specifically noted that the Navy's requirements should focus on
achieving an affordable, adaptable platform that supports a wide range
of missions within 3 to 6 years. As a result, the Navy scaled down the
UCLASS requirements and updated its analysis of alternatives to
include requirements that are more affordable and feasible. Our prior
work has found that matching requirements with resources before
beginning a system development program increases the likelihood that
the program will meet cost and schedule objectives.[Footnote 17]
* Holding competition for preliminary designs: In fiscal year 2013,
the Navy plans to award four firm fixed-price contracts to competing
contractors to develop and deliver preliminary air vehicle designs.
The Navy then plans to review those preliminary designs, conduct a
full and open competition, and award a single air vehicle segment
contract. The Navy believes that this competition will drive
efficiencies and ultimately result in cost savings across the system's
life cycle. This strategy reflects recent DOD initiatives that
emphasize the importance of competition, which we have noted in the
past, can help reduce program costs.[Footnote 18]
Conclusions:
The Navy plans to manage UCLASS as a technology development program,
although its strategy encompasses activities commensurate with system
development and early production. The Navy believes the strategy
provides considerable latitude to manage UCLASS development and to
demonstrate significant knowledge before the Milestone B decision.
Indeed, we have often reported that programs tend to move forward with
Milestone B and system development before they have demonstrated
enough knowledge. But the Navy's plan to develop, manufacture, and
field operational UCLASS systems on up to four aircraft carriers
before holding a Milestone B decision would defer the decision and
mechanisms that would otherwise enable oversight of these very program
activities until after they are over. Without a program baseline and
regular reporting on progress, it will be difficult for Congress to
hold the Navy accountable for achieving UCLASS cost, schedule, and
performance goals. As we have noted, these kinds of risks are present
in the program and warrant such oversight. Looking ahead to fiscal
year 2020, when the UCLASS system is already being delivered, Congress
may have few options other than to continue authorizing funding for
UCLASS manufacturing and fielding.
If the UCLASS program can be executed according to the Navy's
strategy, it would be consistent with the normal DOD acquisition
process that applies to most weapon system programs, with the
exception of the deferral of the Milestone B review. In fact, the
timing of the Milestone B review notwithstanding, the actual program
activities planned are consistent with a knowledge-based acquisition
approach. For example, the Navy is leveraging knowledge gained from
prior technology development programs, incorporating an open systems
design, matching resources with requirements, and utilizing
competition. Given the competitive preliminary design process planned
and subsequent competitive contract award, it seems reasonable that a
Milestone B decision could be held following the competition and
before the beginning of system development, providing a solid
oversight framework with little or no change to the strategy's
schedule.
Matters for Congressional Consideration:
To enhance program oversight and accountability given that the Navy
does not plan to modify its acquisition strategy and hold a Milestone
B decision review for the UCLASS system following the system level
preliminary design review in fiscal year 2015, Congress should
consider directing the Navy to hold a Milestone B review for the
system after the system level preliminary design review is complete.
If the Navy does not comply, Congress should consider limiting the
amount of funding available for the UCLASS system until the Navy
provides the basic elements of an acquisition program baseline, such
as development and production cost estimates, unit costs, quantities,
schedules, annual funding profiles, and key performance parameters
needed for such a large investment. The Navy should also be required
to periodically report the program's status against the baseline.
Recommendation for Executive Action:
In order to provide for increased congressional oversight and program
accountability, we recommend that the Secretary of Defense direct the
Secretary of the Navy to hold a Milestone B decision review for the
UCLASS system following the system level preliminary design review--
which is currently scheduled in fiscal year 2015.
Agency Comments and Our Evaluation:
The Navy provided us with written comments on a draft of this report.
The Navy's comments are reprinted in appendix II. The Navy also
provided technical comments, which were incorporated as appropriate.
The Navy did not concur with our recommendation to hold a Milestone B
decision review for the UCLASS system following its planned system
level preliminary design review in 2015. The Navy stated that the
Under Secretary of Defense for Acquisition, Technology, and Logistics
approved its UCLASS acquisition strategy in 2013 and certified that
the strategy was compliant with the Weapon Systems Acquisition Reform
Act of 2009,[Footnote 19] the amendments made to that Act, and DOD
policy. The Navy pointed out that DOD's policy defines the technology
development phase as an "iterative process designed to assess the
viability of technologies while simultaneously refining user
requirements." The Navy went on to state that the UCLASS user
requirements and Concept of Operations will be refined during the
early operational capability fleet exercises currently scheduled to
begin in fiscal year 2020 and that, at that time, the Navy plans to
request approval to hold a Milestone B review to continue development
of the UCLASS capability.
While the Navy's UCLASS acquisition strategy may be compliant with
laws and DOD policy, the development, production, and fielding of an
operational system before holding a Milestone B review will limit
congressional oversight of a significant investment in weapon system
development. An estimated development cost of $3.7 billion makes this
UCLASS investment larger than the majority of DOD's current major
weapon system development programs. We agree that the technology
development phase of an acquisition program is intended to assess the
viability of technologies while refining requirements. However, the
system development and early production activities included in the
Navy's UCLASS acquisition strategy go well beyond technology
development and requirements refinement, and thus warrant oversight
commensurate with a major weapon system development program. Thus, we
continue to believe that our recommendation is valid and are making
two matters for congressional consideration to ensure Congress has
information available to oversee the UCLASS system and to hold the
Navy accountable for achieving UCLASS cost, schedule, and performance
goals.
We are sending copies of this report to the Secretary of Defense, the
Secretary of the Navy, and interested congressional committees. In
addition, the report is available at no charge on the GAO website at
[hyperlink, http://www.gao.gov].
If you have any questions about this report or need additional
information, please contact me at (202) 512-4841 or sullivanm@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Key contributors
to this report are listed in appendix III.
Signed by:
Michael J. Sullivan:
Director:
Acquisition and Sourcing Management:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable James M. Inhofe:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Dick Durbin:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Howard P. "Buck" McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable C. W. Bill Young:
Chairman:
The Honorable Pete Visclosky:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The National Defense Authorization Act for Fiscal Year 2012 mandated
that GAO evaluate the Unmanned Carrier-Launched Airborne Surveillance
and Strike (UCLASS) system acquisition strategy.[Footnote 20] This
report (1) assesses the Navy's UCLASS acquisition strategy, (2)
identifies key areas of risk facing the UCLASS system, and (3) notes
areas where the Navy's strategy contains good practices.
In order to assess the Navy's UCLASS acquisition strategy, we
collected, reviewed, and compared the UCLASS acquisition strategy with
best practice standards for using knowledge to support key program
investment decisions.[Footnote 21] These standards are based on GAO's
extensive body of work in this area. Additionally we compared the
Navy's strategy against DOD acquisition policy.[Footnote 22]
In order to identify any key areas of risk facing the UCLASS system
and note areas where the Navy's strategy contains good practices, we
collected and reviewed additional UCLASS documentation, such as the
analysis of alternatives, capabilities development document, and other
relevant Navy management documents. We discussed the Navy's UCLASS
acquisition strategy with officials from the UCLASS system program
office, the Naval Air Systems Command, the Chief of Naval Operations,
and organizations within the Office of the Secretary of Defense (OSD)
including the Director of OSD Cost Assessment and Program Evaluation,
the Deputy Assistant Secretary of Defense for Systems Engineering, and
the Under Secretary of Defense for Acquisition, Technology, and
Logistics.
We conducted this performance audit from July 2013 to September 2013
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
finding based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Defense:
Department of The Navy:
Office of The Chief of Naval Operations:
2000 Navy Pentagon:
Washington, D.C. 20350-2000:
September 13, 2013:
Mr. Michael J. Sullivan:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Sullivan:
This is the Department of Defense response to the U.S. Government
Accountability Office (GAO) Draft Report, GAO-l3-833, "Defense
Acquisitions: Navy Strategy for Unmanned Carrier-Based Aircraft System
Defers Key Oversight Mechanisms," dated September 2013. Detailed
comments on the report recommendations are enclosed.
We appreciate the opportunity to comment on the draft report.
Technical comments were provided separately for your
consideration. Should you have any questions, please contact
CDR Peter Yelle, OPNAV N2N6F2, at 703-695-8411 or
peter.Yelle@navy.mil.
Sincerely,
Signed by:
D.H. Miller III
RDML, USN:
Enclosure: As stated:
GAO Draft Report Dated August 23, 2013:
GAO-13-833 (GAO Code 121155):
"Defense Acquisitions: Navy Strategy For Unmanned Carrier-Based
Aircraft System Defers Key Oversight Mechanisms"
Department Of The Navy Comments To The GAO Recommendation:
Recommendation 1: In order to provide for increased Congressional
oversight and program accountability, GAO recommends that the
Secretary of Defense direct the Secretary of the Navy to hold a
Milestone B decision review for the UCLASS system following the system
level preliminary design review-that is currently scheduled in fiscal
year 2015.
DON Response: The Navy does not concur with the GAO recommendation to
hold a Milestone B decision review following the system level
preliminary design review. The UCLASS acquisition strategy, as
outlined in the UCLASS Technology Development Strategy approved by the
Under Secretary of Defense for Acquisition, Technology & Logistics
(USD(AT&L)) in June 2013, complies with DOD5000.02. Further, the Joint
Requirements Oversight Council, Assistant Secretary of the Navy for
Research, Development, and Acquisition and USD(AT&L) provided
certification to the Congressional defense committees that the
strategy met each of the requirements outlined in the FY2012 National
Defense Authorization Act (NDAA). In particular, the USD(AT&L)
certified that the programs acquisition strategy was compliant with
the Weapon Systems Acquisition Reform Act of 2009 (Public Law 111-23),
the amendments made to that Act, and DoD Instruction 5000.02.
DoDI 5000.02 defines Technology Development as an "iterative process
designed to assess the viability of technologies while simultaneously
refining user requirements." User requirements and the UCLASS Concept
of Operations will be refined during Early Operational Capability
fleet exercises, currently scheduled for 2020. After these events, the
draft UCLASS Capabilities Development Document will be updated and
forwarded for JROC approval. Subsequently, the Navy will request
approval to enter the Engineering, Manufacturing and Development (EMD)
phase at a Milestone B review in order to continue development of this
capability.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Michael J. Sullivan, (202) 512-4841 or sullivanm@gao.gov.
Staff Acknowledgments:
In addition to the contact named above, key contributors to this
report were Travis Masters, Assistant Director; Laura Greifner; Julie
Hadley; Kristine Hassinger; Laura Jezewski; Matt Lea; John Pendleton;
Dr. Timothy M. Persons; and Roxanna Sun.
[End of section]
Footnotes:
[1] The air vehicle segment is to develop a carrier-suitable, semi-
autonomous, unmanned vehicle capable of sustained intelligence,
surveillance, reconnaissance, and targeting operations and strike
capability. The carrier segment is to provide upgrades to existing
carrier infrastructure, integrate capability within existing program
of record systems, add new mission essential equipment, and provide
operating procedures to support unmanned aircraft system operations.
The control segment is to interface and upgrade existing command and
control systems, specifically the Intelligence, Surveillance,
Reconnaissance, and Targeting system, and the Tasking, Processing,
Exploitation, and Dissemination system.
[2] Pub. L. No.112-81, § 213(b) (2011).
[3] GAO developed these standards for using knowledge to support key
program investment decisions, which are discussed later in the report.
For more information, see GAO, Defense Acquisitions: Assessments of
Selected Weapon Programs, [hyperlink,
http://www.gao.gov/products/GAO-13-294SP] (Washington, D.C.: Mar. 28,
2013).
[4] Department of Defense Instruction 5000.02, Operation of the
Defense Acquisition System (Dec. 8, 2008) (hereinafter cited as DODI
5000.02 (Dec. 8, 2008)).
[5] GAO, Best Practices: DOD Can Achieve Better Outcomes by
Standardizing the Way Manufacturing Risks Are Managed, [hyperlink,
http://www.gao.gov/products/GAO-10-439] (Washington, D.C: Apr. 22,
2010); Best Practices: High Levels of Knowledge at Key Points
Differentiate Commercial Shipbuilding from Navy Shipbuilding,
[hyperlink, http://www.gao.gov/products/GAO-09-322] (Washington, D.C.:
May 13, 2009); Defense Acquisitions: A Knowledge-Based Funding
Approach Could Improve Major Weapon System Program Outcomes,
[hyperlink, http://www.gao.gov/products/GAO-08-619] (Washington, D.C.:
July 2, 2008); Best Practices: Capturing Design and Manufacturing
Knowledge Early Improves Acquisition Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-02-701] (Washington, D.C.: July 15,
2002); Best Practices: Better Matching of Needs and Resources Will
Lead to Better Weapon System Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-01-288] (Washington, D.C.: Mar. 8,
2001); and Best Practices: Better Management of Technology Development
Can Improve Weapon System Outcomes, [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-99-162] (Washington, D.C.: July
30, 1999).
[6] For more information on GAO's knowledge points see GAO, Defense
Acquisitions: Assessments of Selected Weapon Programs, [hyperlink,
http://www.gao.gov/products/GAO-13-294SP] (Washington, D.C: Mar. 28,
2013).
[7] DODI 5000.02, Encl. 2, para. 5.a. (Dec. 8, 2008).
[8] Enacted in 1982, the statutory provision known as Nunn-McCurdy
requires DOD to notify Congress whenever a major defense acquisition
program's unit cost experiences cost growth that exceeds certain
thresholds. This is commonly referred to as a Nunn-McCurdy breach. 10
U.S.C. § 2433.
[9] DODI 5000.02, Encl. 2, paras. 5.d(7) and 6.a and Encl. 4, Table 2-
1 (Dec. 8, 2008).
[10] 10 U.S.C. § 2366b(a).
[11] Firm fixed-price contracts provide a firm price to the
government. This contract type places the risk of increased costs of
performance upon the contractor.
[12] GAO, Defense Acquisitions: Missile Defense Acquisition Strategy
Generates Results but Delivers Less at a Higher Cost, [hyperlink,
http://www.gao.gov/products/GAO-07-387] (Washington, D.C.: Mar. 15,
2007).
[13] The Common Control System is the UCLASS control segment software
that implements a common framework, user interfaces, applications, and
services that will be integrated and tested with unique applications
and services required by the air vehicle. The Navy is developing the
software and UCLASS is the first system that will integrate the
software.
[14] GAO, Defense Acquisitions: Assessments of Selected Weapon
Programs, [hyperlink, http://www.gao.gov/products/GAO-13-294SP]
(Washington, D.C.: Mar. 28, 2013).
[15] An open systems approach, which incorporates modular design and
open standards for key interfaces, can provide numerous cost,
schedule, and performance benefits. It allows components to be added,
removed, modified, replaced, or sustained by consumers or different
manufacturers in addition to the manufacturer that developed the
system. It also allows independent suppliers to build components that
can plug into the existing system through the open connections.
[16] GAO, Defense Acquisitions: DOD Efforts to Adopt Open Systems for
Its Unmanned Aircraft Systems Have Progressed Slowly, [hyperlink,
http://www.gao.gov/products/GAO-13-651] (Washington, D.C.: July 31,
2013).
[17] GAO, Best Practices: Capturing Design and Manufacturing Knowledge
Early Improves Acquisition Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-02-701] (Washington, D.C.: July 15,
2002); and GAO, Best Practices: Better Matching of Needs and Resources
Will Lead to Better Weapon System Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-01-288] (Washington, D.C.: Mar. 8,
2001).
[18] GAO, Defense Acquisitions: Assessments of Selected Weapon
Programs, [hyperlink, http://www.gao.gov/products/GAO-13-294SP]
(Washington, D.C.: Mar. 28, 2013).
[19] Pub. L. No. 111-23.
[20] Pub. L. No.112-81, § 213(b) (2011).
[21] GAO developed these standards for using knowledge to support key
program investment decisions, which are discussed in the report. For
more information, see GAO, Defense Acquisitions: Assessments of
Selected Weapon Programs, [hyperlink,
http://www.gao.gov/products/GAO-13-294SP] (Washington, D.C.: Mar. 28,
2013).
[22] Department of Defense Instruction 5000.02, Operation of the
Defense Acquisition System (Dec. 8, 2008).
[End of section]
GAO’s Mission:
The Government Accountability Office, the audit, evaluation, and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the
performance and accountability of the federal government for the
American people. GAO examines the use of public funds; evaluates
federal programs and policies; and provides analyses, recommendations,
and other assistance to help Congress make informed oversight, policy,
and funding decisions. GAO’s commitment to good government is
reflected in its core values of accountability, integrity, and
reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO’s website [hyperlink, http://www.gao.gov]. Each
weekday afternoon, GAO posts on its website newly released reports,
testimony, and correspondence. To have GAO e-mail you a list of newly
posted products, go to [hyperlink, http://www.gao.gov] and select
“E-mail Updates.”
Order by Phone:
The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black
and white. Pricing and ordering information is posted on GAO’s
website, [hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
Connect with GAO:
Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov].
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm];
E-mail: fraudnet@gao.gov;
Automated answering system: (800) 424-5454 or (202) 512-7470.
Congressional Relations:
Katherine Siggerud, Managing Director, siggerudk@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, DC 20548.
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, DC 20548.
[End of document]